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Welcome to Loans-UK
- Interest Rates
Requirements in respect of how
the annual percentage rate and total charge for credit
are expressed are covered in the following sets of regulations:
- Consumer Credit (Total Charges for
Credit) Regulations 1980 – the TCC Regulations,
as amended by the Consumer Credit (Total Charge for
Credit, Agreements and Advertisements) (Amendment)
Regulations 1999;
- Consumer Credit (Advertisements Regulations
1989 as amended;
- Consumer Credit (Quotations) Regulations
1989 – the Quotations Regulations;
- Consumer Credit (Advertisements and
Content of Quotations) (Amendment) Regulations 2000.
The Total Cost for Credit (‘TCC’)
Regulations provide a standardized way of expressing
the total true cost of a loan to the prospective borrower
– expressed as the total charge for credit. The
regulations lay down the items to be included in this
calculation, the means of performing the calculation
and the means of calculating the APR (annual percentage
rate).
The annual percentage rate (‘APR’)
is defined as ‘the effective annual compound interest
rate at which the sum of the present values of the repayment
of the loan and associated charges equate to the amount
of the loan’. It produces an ‘effective
interest rate’ for the total charge for credit,
so that a consumer can compare several APRs and in principle
be comparing like with like in terms of the costs of
each loan. (It aims to even out distortions arising
from timing issues, charges and the like.) |
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